Finnish government’s bridge to Asia drives IT deals

The Finnish government has increased links with Asian countries with its innovative tech sector a selling point

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Gerard O'Dwyer

Building stronger and more sustainable trade bridges to markets in Asia, with tech expertise on offer, became one of the chief pillars underpinning Finland’s gradual return to robust economic growth.

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Against a backdrop of diminishing exports to Russia, the financial crash of 2008 had a hugely detrimental impact on Finland. Not only did it propel the economy into technical recession with high unemployment, Finns had to endure eight years of public cuts and harsh austerity budgets.

With the economies of North America and Europe also suffering in the wake of the 2008 downturn, Finland looked increasingly to Asia, and especially China, to pursue trade and export growth.

After 2014, the Finnish government began to launch new initiatives in cooperation with the private sector to construct a technology-partnership bridge between Finland and Asia. At its most fundamental level, the plan leveraged on Finland’s international reputation as a tech-savvy and innovative force in the delivery of advanced artificial intelligence (AI) and mobile communications solutions.

The largely state-funded Finland-Asia bridge-building project has released over €500m, from various business startups, R&D and export incentive funds in the direction of the country’s substantial community of small to medium-sized IT firms. The government’s central initiative to support export growth and business partnerships in Asia attracted the country’s biggest technology players, including the ever-present Nokia, Avaintec, Nanocomp, Salcomp Oy and Rovio, the digital entertainment and technologies group behind Angry Birds.

Salcomp, Finland’s biggest producer of phone chargers and adapters, scaled up its fast-paced investment strategy in China in the second half of 2017, when it opened a new manufacturing plant in Guigang. The 85,000 square metre unit has a capacity to produce 350 million chargers a year, making it the biggest such facility in China. The plant, which is expected to employ 5,500 workers by the end of 2018, will also serve markets in Malaysia, Vietnam, India, South Korea, Brazil, Mexico and North America.

“Around 70% of the world’s smart phones are produced in China. It makes perfect sense to be here. The Guigang plant is an important strategic step for us. The growth of the smartphone market has been especially strong in China in recent years. This has increased the need for additional capacity,” said Markku Hangasjärvi, CEO of Salcomp.

Infosys is stepping up its Nordic presence with a new operation in Finland, with a design and innovation centre in Helsinki in spring 2018.

The “tech-bridge” concept has also proven to be an effective platform to lure Asian investment to Finland. The level of interest from China, in both launching capital investment projects and in the arena of partnerships, has surpassed the expectations of Invest in Finland (IIF), the country’s leading investment promotion agency.

IIF has played a key role in attracting international giants Google and Huawei to Finland. Google continues to grow its datacentre presence in Finland, while Huawei is expanding its research and development activities around camera, audio and imaging technologies.

Finland’s R&D and product development ecosystem is a major draw for Chinese companies and investors. Paladin, the Hong Kong-listed investment holding group, has established three tech-driven operations in Finland since January 2017. The company’s latest venture, the Oulu-located DynimLabs, is tasked with conducting R&D and product development of camera modules.

Paladin had earlier established Kindhelm, which specialises in high-accuracy navigation and geo-positioning technologies, in Finland in June 2017. Its third Finnish operation, Pexraytech, develops x-ray technologies and devices.

Positive impact

The positive impact of inward Asian IT-technology investment in Finland is clearly visible from the country’s foreign direct investment (FDI) data for 2017. Of the 180 new foreign company startups in Finland in 2017, almost 40% have, in part or whole, Asian ownership.

“For the Chinese, Finland is interesting due to our potential as a product development centre based on our high level of skills and innovativeness, as well as our location as a gateway to European markets,” said Jari Gustafsson, the permanent secretary at the Ministry of Economic Affairs and Employment.

The government-led Finland-China bridge initiative also partnered with the state airline Finnair. The flag carrier has significantly increased flight numbers and routes to China and the general Asia region since 2016. By June 2018, Finnair will operate over 38 weekly flights from Helsinki to China. The airline, in November 2017, became the first European carrier to enable flight booking, ticket sales and payments through its WeChat Pay account in China.

The success to-date of the Finland-Asia bridge-building project can be measured in tangible results, especially in terms of the number of advanced AI and IT partnerships being created between Finnish and Chinese companies.

In one such partnership launched in January 2018, the Eksote-Avaintec data management consortium linked with Chinese tech firms to commercialise AI and machine learning technologies. The Eksote-Avaintec consortium comprises the regional Eksote medical centre and the data management firm Avaintec Oy.

Improving diagnosis, treatment and prevention

The first phase of the agreement will see Eksote-Avaintec join forces with the Sichuan Provincial People’s Hospital to co-develop AI and machine learning technologies aimed at improving diagnosis, treatment and prevention.

In reality, the Xi Jinping visit to Finland took IT-sector cooperation to a whole new level for Finnish tech companies. It also provided an opportune collaborative gateway for major Chinese players, such as Alibaba Cloud, seeking to connect with Finland’s rising IT starlets.

Alibaba Cloud formed an alliance with Finnish DevOps specialist Eficode Oy in December 2017 to set up a joint Innovation Centre in Helsinki to boost collaboration between Nordic and Chinese tech enterprises.

A significant dimension of the Innovation Centre’s activities will be to develop solutions to help companies deal with the digital challenges involved in business expansion and digital transformation, said Alexander Yin, Eficode’s chief financial officer.

“In the age of globalisation, innovation collaboration is becoming a key factor – not only for companies, but also for countries to compete and succeed. Our innovation centre cooperation with Alibaba Cloud deepens collaboration between regions,” said Yin.

Groundbreaking innovation

Alibaba Cloud plans to use the Helsinki-based Innovation Centre to broaden its presence in Finland. The Nordic country’s international reputation for groundbreaking innovation in data intelligence and cloud computing is considered an ideal fit for the Chinese company, said Yeming Wang, Alibaba Cloud Global’s deputy general manager.

“Our ambition is to empower Finnish companies to achieve global expansion and success through the innovation centre,” said Wang.

Jolla Oy, the Finnish mobile company and developer of the open mobile operating system Sailfish OS, has also crossed the Finno-Asian bridge to China. It has launched a new Sailfish China consortium that plans to build an independent mobile operating system based on Sailfish OS for China. The Sailfish China consortium will develop Sailfish OS-based solutions for secure smartphones, the automotive industry, TV, the internet of things and smart watches.

“The Sailfish consortium aims to invest €230m in the Sailfish ecosystem development in China,” said Antti Saarnio, chairman of Jolla.

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